Is Bitcoin’s Value Increased Due to The Social Status It Provides?
Bermstein Research accomplished a study on the subject.
Recently, Bernstein Research conducted a study about the cause behind Bitcoin’s price surge. The analysts admit that limited supply plays an important role in the price surge. But also is the social status that comes with owning Bitcoin can cause investors to join the hype. According to the analysts, Bitcoin does not provide investors with flows of cash or other benefits, but Bitcoin’s maximum supply is fixed. Thus, the speculation on the potential demand for the leading cryptocurrency is influencing the price.
Bitcoin is acting such as a Veblen good, just like fashion brands or fancy cars. The higher prices for specific goods can contribute to the reinforcement of the social status that is attached to a product. Bernstein refers to this phenomenon as “snob value”. In addition, the analysis revealed that they conducted a consumer survey of 1,070 Chinese premium good consumers in mid-2017. The survey results showed that Veblen Demand is the third most important factor of brand choice in brands
Further, Bitcoin is considered as difficult to understand for the people who are not in the industry. Thus, owning Bitcoins immediately adds that “snob value” to the owner, which implies greater insight or intelligence.
Another example is the companies that nowadays simply add “Blockchain” to their name to receive huge waves of interest. Also, this adds to the social status that comes with being a company that is in the cryptocurrency industry.
Social status seems to be another motivator that attracts investors in the cryptocurrency space
It makes perfect sense for everyone wanting to invest in something that its value has raised more than 1300% only in a year. If we consider also the social status is an important factor for investing in Bitcoin, it’s not difficult to understand why so many investors are hyped for purchasing Bitcoin.